Oil prices edged lower on Monday as a rising rig count in the United States pointed to higher production, but prices held near more than three-year highs and were on track to rise for a second consecutive month.
The oil complex has been driven by supply concerns amid prospects of the United States reimposing sanctions on Iran, while OPEC-led producers continue to withhold supplies.
Brent crude futures, the international benchmark, dipped 39 cents, or 0.5 percent, to $74.25 a barrel at 0305 GMT. Prices climbed as high as $75.47 last week, levels not seen since November, 2014.
US West Texas Intermediate (WTI) crude futures were at $67.89 a barrel, down 21 cents, or about 0.3 percent, from their last settlement.
"There's a small drop in trading this morning but volumes are low and there's not much commitment in the selling. The overall trend is positive and there's potential for the market to close higher again today," said Michael McCarthy, chief marketing strategist at CMC Markets.
"The underlying strength in crude markets is quite impressive and a lot of it is predicated by sanctions... Other than that it's the demand picture around the globe, and if that continues we could see higher prices."
US drillers added five oil rigs in the week to April 27, bringing the total count to 825, the highest level since March 2015, General Electric's Baker Hughes energy services firm said.
"Although the overall U.S. oil rig count rose by five, the prolific Permian region saw oil rigs decline by one," Anthony Headrick, energy market analyst and commodities futures broker at CHS Hedging LLC, said in an email.
"The widening discount for WTI Midland crude could eventually stymie the enthusiasm we've seen so far this year in the Permian region, which could be viewed as a supportive checkmark."
Over the past two months, WTI's discount to Brent has more than doubled to over $6 a barrel from around $3 at the beginning of March.
US crude production has soared more than 25 percent since mid-2016 to a record 10.59 million barrels per day (bpd). Only Russia currently produces more, at around 11 million bpd.
Brent prices have gained nearly 6 percent this month, buoyed by expectations the United States will renew sanctions.
US President Donald Trump has until May 12 to decide whether to restore sanctions on Iran that were lifted after an agreement over its disputed nuclear programme."Precisely what happens with Tehran's nuclear program remains the most significant driver in oil price sentiment," said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA.